Health insurance reform as currently proposed in both the House Tri-Committee and in the Senate HELP Committee would ensure that virtually all Americans receive health insurance. As part of the proposed increases in health insurance coverage, the House Tri-Committee legislation calls for an expansion in Medicaid to all individuals under 133 percent of the federal poverty line (FPL). 1 Understandably, there has been some concern in state capitals surrounding this proposal given the possible increase in state Medicaid expenditures that could result.
However, state and local governments are already spending billions of dollars each year providing coverage to the uninsured – costs that could be significantly reduced as a result of the currently proposed reforms. Additionally, state and local governments employ more than 19 million individuals, and their total spending on health insurance premiums for this group in 2007 was approximately $95 billion. 2 This group currently pays a “hidden tax” in the form of higher health insurance premiums that helps to cover expenses incurred by the uninsured. This burden would be greatly reduced as a result of expansions in insurance coverage resulting from health insurance reform, which would generate significant savings for state and local governments.
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